Humana 2013 Annual Report Download - page 114

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On October 29, 2012, we acquired a noncontrolling equity interest in MCCI Holdings, LLC, or MCCI, a
privately held MSO headquartered in Miami, Florida that coordinates medical care for Medicare Advantage and
Medicaid beneficiaries primarily in Florida and Texas.
The Metropolitan and MCCI transactions provide us with components of a successful integrated care
delivery model that has demonstrated scalability to new markets. A substantial portion of the revenues for both
Metropolitan and MCCI are derived from services provided to Humana Medicare Advantage members under
capitation contracts with our health plans. In addition, Metropolitan and MCCI provide services to Medicare
Advantage and Medicaid members under capitation contracts with third party health plans. Under these
capitation agreements with Humana and third party health plans, Metropolitan and MCCI assume financial risk
associated with these Medicare Advantage and Medicaid members.
On July 6, 2012, we acquired SeniorBridge Family Companies, Inc., or SeniorBridge, a chronic-care
provider of in-home care for seniors, expanding our existing clinical and home health capabilities and
strengthening our offerings for members with complex chronic-care needs. The allocation of the purchase price
resulted in goodwill of $99 million and other intangible assets of $14 million. The goodwill was assigned to the
Healthcare Services segment and is not deductible for tax purposes. The other intangible assets, which primarily
consist of customer contracts, trade name, and technology, have a weighted average useful life of 5.2 years.
Effective March 31, 2012, we acquired Arcadian Management Services, Inc., or Arcadian, a Medicare
Advantage health maintenance organization (HMO) serving members in 15 U.S. states, increasing Medicare
membership and expanding our Medicare footprint and future growth opportunities in these areas. The allocation
of the purchase price resulted in goodwill of $44 million and other intangible assets of $38 million. The goodwill
was assigned to the Retail segment and is not deductible for tax purposes. The other intangible assets, which
primarily consist of customer contracts and provider contracts, have a weighted average useful life of 9.7 years.
On December 6, 2011, we acquired Anvita, Inc., or Anvita, a San Diego-based health care analytics
company. The Anvita acquisition provides scalable analytics solutions that produce clinical insights which we
expect to enhance our ability to improve the quality and lower the cost of health care for our members and
customers. The allocation of the purchase price resulted in goodwill of $116 million and other intangible assets
of $60 million. The goodwill was assigned to the Retail segment and is not deductible for tax purposes. The other
intangible assets, which primarily consist of technology, have a weighted average useful life of 6.5 years.
The results of operations and financial condition of American Eldercare, Metropolitan, SeniorBridge,
Arcadian, and Anvita have been included in our consolidated statements of income and consolidated balance
sheets from the acquisition dates. In addition, during 2013, 2012 and 2011, we acquired other health and wellness
and technology related businesses which, individually or in the aggregate, have not had, or are not expected to
have, a material impact on our results of operations, financial condition, or cash flows. Acquisition-related costs
recognized in each of 2013, 2012, and 2011 were not material to our results of operations. The pro forma
financial information assuming the acquisitions had occurred as of the beginning of the calendar year prior to the
year of acquisition, as well as the revenues and earnings generated during the current year were not material for
disclosure purposes.
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